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Uniform and nonuniform staggering of wage contracts

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  • Danziger, Leif

Abstract

This paper provides a model that can account for the almost uniform staggering of wage contracts in some countries as well as for the markedly nonuniform staggering in others. In the model, short and long contracts as well as long contracts concluded in different periods are strategic substitutes, which provide a powerful rationale for staggering. We show that for realistic parameter values, there is a continuum of possible equilibria with various degrees of staggering of long contracts. If the contracting cost is not too large, then the lowest possible degree of staggering decreases with the contracting cost and increases with monetary uncertainty.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 6 (December)
Pages: 1038-1049

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Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:1038-1049

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Uniform staggering Nonuniform staggering Monetary policy shocks Strategic substitutability Wage contracts Contract duration;

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Cited by:
  1. Michael Funke & Yu-Fu Chen, 2010. "Global warming and extreme events: Rethinking the timing and intensity of environment policy," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 21007b, Hamburg University, Department of Economics.

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